Shell to Reinstate Reserves

Nigerian officials revealed that the country's oil and gas fields accounted for a third of Royal Dutch/Shell's surprise cuts in proved reserves last month.

That makes Nigeria the single largest contributor to the company's announcement that it had slashed proved reserves by 3.9bn barrels.

But Shell is said to have told the Nigerian government that it expects to reinstate at least half the downgraded reserves as proved within five years.

This may help sooth investor anger ahead of Thursday's earnings conference where Sir Philip Watts, Shell's chairman, is expected to explain for the first time why the company was forced to cut 20 per cent of its proved oil and gas reserves.

In interviews with the Financial Times, government officials and industry sources said natural gas was a large factor in Shell's misjudgment in prematurely booking some of Nigeria's oil and gas fields as ready for development between 1996 and 2002.